Responding to a proposal that would established a set spending cap as a percentage of GDP is raising concerns of consumer and provider groups because of the potential impact to entitlement programs.
A proposal currently in Congress, the Commitment to American Prosperity (CAP) Act, would limit federal spending to approximately 20.6% of Gross Domestic Product and would automatically implements cuts across all federal programs in any year that projected spending exceeded that cap.
Introduced by Senators Bob Corker (R, TN) and Claire McCaskill (D, MO), the bill provides a 10 year plan for pushing down spending from a current level of 24.7% to the proposed level.
Concerned about the impacts to programs that could face such cuts, AARP, American Hospital Association, American Medical Association, American College of Cardiology and LeadingAge commissioned a study by the Lewin Group to examine the potential results should this act be passed.
The study indicated that this approach to spending caps would lead about $4.2 trillion in budget cuts over 10 years, with the larger share coming from entitlement programs, including: $1.3 trillion to Social Security, $859 billion under Medicate and $575 billion in federal Medicare payments to states. According to the Lewin Group, these cuts would lead to:
Social Security would be cut by about 20%, forcing 2.1 million seniors into poverty, an increase of 44%
5.1 million people would lose health insurance
Medicare fee reductions would reduce the number of physicians participating in the program
Cuts in hospital operations, reducing access to care, and potential loss of up to 1.3 million health care jobs
Increase costs for employer paid health insurance programs
"AARP understands the nation's long-term fiscal challenges must be confronted, but this discussion cannot simply be reduced to a budget exercise—this is about real people," said David Certner, AARP's Legislative Policy Director. "We oppose proposals that rely on arbitrary spending limits because they could result in harmful cuts to the critical Medicare, Social Security and long-term care benefits that allow millions of older Americans to live independently and age with dignity. Such proposals threaten the financial and health security of today's seniors and future generations."
"Physicians appreciate the need to reduce our nation's deficit, but it must be done strategically rather than with across-the-board cuts that harm vulnerable patient populations," said American Medical Association President Peter Carmel, M.D. "We know from experience that across-the-board cuts to federal health programs are counterproductive to health system improvements and will ultimately limit access to care for patients."
The CAP Act represents one of many proposals that are under discussion as Congress continues to seek ways to address federal budget deficits and reach agreement on increasing the debt ceiling..